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What is a DMP?
If your financial problems stem from
too much debt or your inability to repay your debts, a credit counseling agency
may recommend that you enroll in a debt management plan (DMP). A DMP alone is
not credit counseling, and DMP's are not for everyone. You should sign up for
one of these plans only after a certified credit counselor has spent time
thoroughly reviewing your financial situation, and has offered you customized
advice on managing your money. Even if a DMP is appropriate for you, a reputable
credit counseling organization still can help you create a budget and teach you
money management skills.
In a DMP, you deposit money each month
with the credit counseling organization, which uses your deposits to pay your
unsecured debts, like your credit card bills, student loans, and medical bills,
according to a payment schedule the counselor develops with you and your
creditors. Your creditors may agree to lower your interest rates or waive
certain fees, but check with all your creditors to be sure they offer the
concessions that a credit counseling organization describes to you. A successful
DMP requires you to make regular, timely payments, and could take 48 months or
more to complete. Ask the credit counselor to estimate how long it will take for
you to complete the plan. You may have to agree not to apply for - or use - any
additional credit while you're participating in the plan. |
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